The government "botched" the privatisation of Royal Mail, short-changing taxpayers by hundreds of millions of pounds, by selling shares too cheaply, Labour has said.

Three months on from privatisation, shares are trading around 561p, 70% higher than the original price of 330p.

The government had said the share price should only be judged after three months.

The Business Minister Michael Fallon denied shares were sold too cheaply.

Media captionMinister for Business and Enterprise Michael Fallon: Privatisation was 'successful'

Shadow business secretary Chuka Umunna said the shares had consistently been above 500p ever since the privatisation.

At the time of the share sale, the Business Secretary Vince Cable had said judgment should be passed on the sale price after three, six or 12 months.

Mr Umunna added: "Three months later, the Business Secretary's dismissal of the sharp rise in share price as 'froth' has been demolished.

"Increasingly it looks like the taxpayer has been left short-changed at a time when services are being cut and families are struggling with David Cameron's cost of living crisis.

"We know that Vince Cable considered, then rejected, the option of floating Royal Mail at a higher price which would have brought in more cash for taxpayers.

"He still has serious outstanding questions to answer on the price he could have received three months ago in respect of what increasingly looks like a botched privatisation."

'Duped'

Mr Fallon told BBC Radio 4's Today programme that he could not have sold Royal Mail for any more because the long-term investors he was targeting had told him they would not pay more and that it was a risky sale because the company was less profitable than its competitors.

Questioned on whether he had been duped, Mr Fallon replied "certainly not", highlighting independent advice the government took in the run up to the sale.

He said he was trying to avoid the Royal Mail coming back to the taxpayer to be bailed out to maintain the service, and that the sale had been a success.

But he added: "It is very easy to look back in hindsight."

Billy Hayes, general secretary of the Communication Workers Union, said taxpayers have been "left with a bad taste as hundreds of millions of pounds have been lost".

"The British public were against the sale of this great public service as consumers and now they know for sure they got a bad deal as taxpayers too."